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Victoria’s manufacturing strengths traditionally lie in the areas of transport equipment; food; TCF; chemicals; pharmaceuticals; printing; and aluminium. In 2006-07, food product manufacturing was Victoria’s largest manufacturing industry, accounting for 20 per cent of the overall sector’s sales and services income, and 19 per cent of its employment. Transport equipment manufacturing ranked second in both sales and services income (15 per cent) and employment (14 per cent). Both food product manufacturing and transport equipment manufacturing made significant contributions to the State’s wages and salaries, each accounting for 17 per cent.27
2.4 An overview of manufacturing industry groups.
Food, beverages and tobacco .
Machinery and Equipment
Textiles, clothing and footwear
Petroleum, coal, chemical and associated products
Printing, publishing and recorded media
Non-metallic mineral products
Wood and paper
The Australian manufacturing sector makes an important contribution to the economy, contributing ten per cent to gross domestic product (GDP) in 2007-08 and accounting for approximately nine per cent of the total labour market. In Victoria, manufacturing is a significant sector, contributing $30.6 billion to gross state product (GSP) in 2007-08, and accounting for 11.4 per cent of total GSP.
Some of the key issues addressed in the report include:
• government support available to the manufacturing sector;
• availability of skills;
• innovation in the manufacturing sector;
• access to finance; and
• factors influencing business growth and competitiveness among local manufacturers.
• The state of manufacturing
The Australian and New Zealand Standard Industrial Classification (ANZSIC) defines manufacturing as “the physical or chemical transformation of materials or components into new products, whether the work is performed by machinery or by hand.” The manufacturing sector comprises the key industry groups of food, beverage and tobacco; machinery and equipment; metal products; non-metallic mineral products; petroleum, coal, chemical and associated products; printing, publishing and recorded media; textiles, clothing and footwear (TCF); wood and paper; and other manufacturing.
Inquiry into Manufacturing in Victoria
In Victoria, the manufacturing sector is a key employer, accounting for 29 per cent of total manufacturing employment in 2006-07. It also accounted for 28 per cent of the total Australian sector’s sale and services income. Key areas of the Victorian manufacturing sector include transport equipment, food, TCF, chemicals, pharmaceuticals, printing, and aluminium. Victoria’s major manufacturing exporters in 2008-09 were the food and beverage, and the automotive industries. Its major imports were crude petroleum and passenger motor vehicles. Overall, the Australian manufacturing sector accounted for 17 per cent of all exports in 2008.
The Australian manufacturing sector has experienced consistent growth over the past three decades. However, while performance of the manufacturing sector has been good in this regard, other sectors of the economy have grown at a much faster rate, and as a result manufacturing has accounted for a decreasing share of GDP and employment relative to other sectors. These trends correlate with observations of manufacturing sectors in most developed economies.
The provision of grants and assistance programs continues to be an important mechanism to support the manufacturing sector, although there is a growing consensus around the need for the effective design of such support to ensure well-defined problems are addressed, rather than activities that would occur without assistance.
The place of Australia’s manufacturing sector in the economy has changed considerably over the past few decades.
Rising imports of manufactured goods into Australia suggests that local manufacturers are experiencing strong competition from overseas manufacturers, particularly those in developing economies where there is significant capacity to manufacture low-value, high-volume products at a low per unit cost.
China’s transition into an industrialised economy has proven particularly challenging for Australian manufacturers, with Chinese imports into Australia increasing by an average of over 20 per cent per year in the period between 1996 and 2006.
Throughout the Inquiry, witnesses expressed concern about the impact of the global financial crisis (GFC) on the Australian manufacturing sector. While the Committee does not believe the GFC has changed underlying trends for the sector, it does recognise the significant challenges that the sector faced as a consequence of the GFC. For example, the Australian Workers’ Union stated in its submission that 77,000 manufacturing-related jobs had disappeared during the GFC.
Government support to the manufacturing sector can take various forms, such as: subsidies to particular industry groups or companies; provision of business support services; tax concessions; procurement policies; and tariffs, quotas and regulatory restrictions on imported goods and services. Government can also provide indirect support through major projects that create flow-on effects to various areas of the economy, including manufacturing.
At both national and state levels, government support to the manufacturing sector includes targeted support to specific
A commonly identified theme in the evidence received by the Committee was the concept of succession planning as it relates to family-owned manufacturing firms. Succession planning is described as:
...the process of making the preparations necessary to ensure family harmony and continuity of the business through to subsequent generations, emphasising that these preparations relate to the future needs of both the business and the family.831
Family-owned firms make an important contribution to the Australian economy. They are the dominant business form in Australia, accounting for around two thirds of all businesses operating in this country.832 According to the MGI Australian Family and Private Business Survey, family businesses generate more than half of Australia’s employment growth and account for about 40 per cent of Australia’s private sector output.83
industry groups, particularly the automotive industry and textiles, clothing and footwear (TCF) industries Most support is industry-neutral, however, with governments tending to focus on driving innovation in manufacturing, and creating comparative advantage across the entire manufacturing sector.